EBGN 570: Environmental Economics
Spring 2016
Jared Carbone
Division of Economics and Business, Colorado School of Mines
Class Meetings: TR, 12:30-1:45p (tentatively)
Contact Info: Email: jcarbone@mines.edu, Phone: x2175, Office: EH 311
Course Website:
Instructional activity: 37.5 hours lecture, 0 hours lab, 3.0 semester hours
Course designation: Elective
Course description
This is a graduate seminar in environmental economics. Environmental economics focuses on
the design of regulations to correct externalities that stem from the provision of environmental
quality. Thus the major themes of the course are the application of concepts from welfare
economics and public economics to environmental policy issues, the use microeconomic theory
to characterize the incentives faced by stakeholders in different regulatory regimes, and empirical
analysis of environmental problems. An important theme of empirical analysis in the field is how
to value environmental quality as an input to benefit-cost analyses. In addition to developing
an understanding of the major issues covered by the field, students will learn how to read and
critique academic journal articles and to identify opportunities for new research at the frontier
the field.
The course is open to both Master’s and PhD students in the Mineral and Energy Economics
program. The only prerequisites are that you have successfully completed at least one graduate
course in microeconomic theory (such as EBGN 511) and that you are comfortable with the
standard mathematical tools used in economics: multivariate calculus, constrained optimization
and linear algebra.
Textbook and/or other requirement materials:
• Required text: None
• Recommended text: Charles D. Kolstad, Environmental Economics, 2nd edition. (Oxford
University Press, 2010).
• Other required supplemental information: Course materials distributed via the course
website or as books on reserve at Arthur Lakes Library.
Student learning outcomes:At the conclusion of the class students will. . .
1. Have an understanding of the major themes cover by the field of environmental economics.
2. Be able to read and critique academic journal articles from the field.
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3. Be able to identify research questions at the frontier of the field.
Brief list of topics covered:
1. Principles of welfare economics, public economics and applied microeconomic theory
2. Theory and empirics of environmental regulation
3. Environmental valuation
Policy on academic integrity/misconduct:
The Colorado School of Mines affirms the principle that all individuals associated with the
Mines academic community have a responsibility for establishing, maintaining and fostering an
understanding and appreciation for academic integrity. In broad terms, this implies protecting
the environment of mutual trust within which scholarly exchange occurs, supporting the ability
of the faculty to fairly and effectively evaluate every student’s academic achievements, and giving
credence to the university’s educational mission, its scholarly objectives and the substance of the
degrees it awards. The protection of academic integrity requires there to be clear and consistent
standards, as well as confrontation and sanctions when individuals violate those standards.
The Colorado School of Mines desires an environment free of any and all forms of academic
misconduct and expects students to act with integrity at all times.
Academic misconduct is the intentional act of fraud, in which an individual seeks to claim
credit for the work and efforts of another without authorization, or uses unauthorized materials
or fabricated information in any academic exercise. Student Academic Misconduct arises when a
student violates the principle of academic integrity. Such behavior erodes mutual trust, distorts
the fair evaluation of academic achievements, violates the ethical code of behavior upon which
education and scholarship rest, and undermines the credibility of the university. Because of the
serious institutional and individual ramifications, student misconduct arising from violations of
academic integrity is not tolerated at Mines. If a student is found to have engaged in such
misconduct sanctions such as change of a grade, loss of institutional privileges, or academic
suspension or dismissal may be imposed.
The complete policy is online.
Grading Procedures:
Homework assignments and exams are marked on a numerical (percentage) basis, then converted to letter grades. The course grade is then calculated using the weights indicated above.
As a guide to determining standing, the following letter grade equivalence will generally apply:
A+
A
AB+
97-100
93-96
90-92
87-89
B
BC+
C
83-86
80-82
77-79
73-76
2
CD+
D
F
70-72
67-69
60-66
<60
Students must successfully complete all components of the course to successfully complete
the course. At the instructor’s prerogative, remedial assignments for partial credit may be
requested of students who have attempted term work without achieving passing grades. Any
work which is not attempted and submitted will be assigned a grade of zero.
There is no final exam scheduled for this course. There will be a final written project which
will be due on the date specified by the registrar for the course’s final exam, were there to be
one.
Notes:
Students seeking reappraisal of a piece of graded term work (term paper, essay, etc.) should
discuss their work with the Instructor within 15 days of the work being returned to the class.
Readings and Problem Sets
The readings will be posted on the course website at least a week in advance of day they
are due. I expect you to be an active participant in class discussions and your final grade will
depend heavily on it. I don’t expect you to know all of the answers, but I do expect you to
ask informed questions in class. There will typically be one to two assigned readings from the
reading list that I will assume you to have read before class.
Over the course of the term, you will write two essays (2000-3000 words) and lead a class
discussions on the ideas contained in your essays. Typically, I will spend tuesdays lecturing on the
topic du jour and thursdays will be devoted to discussion based on the essay assignment written
by someone in the class. At least one of your essays should cover an article from the section of
the reading list covered by the course that week. The other essay may cover an article from the
reading list or a paper from the program of the NBER Summer Institute EEE Group in the last
five years (you can download the papers from here: http://www.nber.org/summer-institute).
You must answer the following questions in your essay.
1. What is the research question described in the article?
2. Why is this an important question to try to answer from society’s perspective?
3. What is the main result?
4. What is the basic strategy the authors use to address the question?
5. Do you think this strategy is appropriate? Why or why not? In particular, are there aspects
of the design that might call into question the authors’ interpretation of the results?
6. How should this result guide future research in this area?
The organization of your essay should reflect these priorities. I expect the essays to be written professionally (i.e. they should be written in clear, well-organized, grammatically correct
English, properly referenced, and written in a style consistent with the production of a professional document like the journal articles you are reading for class.) The essay of the week should
be distributed to me and the students at the class meeting immediately preceding the one in
which you are scheduled to present. All students who are not presenting that week should have
read the article that is the subject of class discussion ahead of time and be prepared to comment
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on it. I will randomly assign which weeks each student’s essays are due. If you have a preference
to write in a week other than one of the ones I assign you, you are welcome to negotiate a trade
with your fellow students. Please inform me of any such transactions well in advance of the due
dates.
Final Project
The final research paper requirements depend on your status as a Master’s or PhD student.
For Master’s students, I will identify a set of possible research questions from the topics covered
in the course. You may choose from among these or you may propose a question of your own
design (subject to my approval). In your paper, you must explain why it is an important
question to answer, place it in the context of the field by conducting a thorough review the
existing literature on your topic, and identify techniques from among those discussed over the
course of the semester that might be employed to answer the question.
PhD students will identify an original research question from the field of environment economics and write a proposal for answering it. Ideally, you will pursue a question that dovetails
with the research agenda you have established (or imagine pursuing) in your dissertation research. You should identify possible strengths and weaknesses of your proposed research design.
As part of proposing a strategy, you need identify the specific techniques you would employ to
answer the research question and demonstrate a clear path to execution. For example, if you
are answering an empirical question you need to propose a credible way of identifying the effect
of interest using available data. If you are answering a theoretical question, you need to identify
and defend the key assumptions that would go into an analytical model.
To help you get started with the final paper project, you are required to submit a short (1
page) proposal in which you explain what your research topic is and why you think it is suitable
for the assignment (as judged by the criteria for the project outlined above.) The proposal is
due by March 31st and you must subsequently arrange a time to discuss your proposal with
me. I will give you feedback on your proposal and suggest changes if I do not feel the topic is
suitable in its original form.
Evaluation
Your final grade is based on participation in class discussions (30%), your essays and class
presentations of assigned readings (35%) and the final project (35%).
Coursework Return Policy:
Graded coursework will be returned to students within two weeks of the date it is submitted
for evaluation.
Absence Policy (e.g., Sports/Activities Policy):
You are required to attend lecture. Notification of planned absences must be given to the
instructor in advance.
Common Exam Policy (if applicable): N/A
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Course Outline
1. The Environment and Economics [Weeks 1-2]
• Scope of the Problem
• Positive vs. Normative Analysis
• Social Choice
2. Review of Empirical Methods [Weeks 3-4]
• Reduced-Form Estimation
• Structural Estimation and Calibration
• Reduced-Form vs. Structural Approaches
3. Public Goods and Externalities [Week 5]
• Public Goods and Externalities
• Voluntary Provision of Public Goods
4. Environmental Regulation [Weeks 6-8]
• Political Economy of Environmental Regulation
• Price vs. Quantity Instruments
• Voluntary Measures
• Risk, Insurance and Liability
• Innovation
• Uncertainty and Asymmetric Information
5. Discounting, Uncertainty, Preservation, Irreversibilities and Option Value [Week 9]
• Discounting
• Option Value
• Irreversibility, feedback effects and tipping points
Spring Break
6. Valuing the Environment [Weeks 11-14]
• Demand for Environmental Goods and Services
• Hedonics
• Equilibrium Sorting
• Hedonics and Climate Change
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• Household Production: Travel Cost and Averting Expenditures
• Constructed Markets
• Voluntary Mechanisms
Final Project Proposals Due: March 31 E-Days
7. Trade and Transboundary Pollution [Weeks 14-16]
• Interjurisdictional Competition
• Trade and the Environment
• Carbon Leakage and Unilateral Climate Policy
• International Environmental Agreements
Additional Topics and Catch-Up
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